Once upon a time, way before the extensive media coverage and the investigations started, everyone believed that Lyoness was able to spend a fortune on a variety of things, all because of the one percent they received on all purchases made with their cashback card.
Not only did Lyoness promise to multiply all of their participants' investments by nine (!), it also signed a three-year sponsor contract with the organisation behind the Austrian Open golf tournament (pdf) for a prize total of at least one million euros, it hosts extravagant and decadent events all across the globe and once in a while, just for fun, it invites people to go on a treasure hunt. With monthly prizes ranging from hundreds of thousands, to millions of euros.
However, when one considers Gerhard Huber's claim that Lyoness has an annual turnover of more than a billion euro, this should not be to hard to comprehend. If the entire Lyoness turnover were to consist of nothing more than the sum of all 1% discounts that Lyoness receives on purchases made by their members, in the shops of those same exact members should amount to one hundred times one billion. This would mean that the approximated 2.7 million Lyoness members would have had to spend one hundred billion euros per year, only on products that can be bought at Lyoness partners (you'd better like LIDL). Yes, that is:
Per year. Per member, this would amount to a little more than 370.000 euros per year.
Lyoness adherents reading this blog may argue that I have no way to prove that this did not happen. Perhaps not, but I've got a hunch.
Additionally, the Swiss medium Beobachter and ORF Report, who's journalists had a look in vital parts of the Lyoness administration, have come to the conclusion that 99.67% of the Lyoness turnover has nothing to do with the one percent (until recently always mentioned as the only source of Lyoness' revenue) they receive on every purchase made by Lyoness members; no, these estimated 990.670.000 euros come from the advance payments on future discounts, i.e. the position system, i.e. the pyramid scheme.
As American readers of this blog may know, the Federal Trade Commission utilises a rule of thumb (pdf) that if a 'company' sells less than 70% of its products or services to consumers outside of their organisation, it is an illegal pyramid scheme, which will consequentially be shut down by the FTC. Lyoness does not sell anything and 99.67% of their turnover comes from inside the organisation, the down payments of enrolled participants.
Unfortunately, for those of you who like fairy tales, this dream got crushed like a small ice cube by a meteor. The only reason Lyoness signed a three-year contract with the Austrian Open was to try to restore the faith of their believers - i.e. that they would still exist in three years. I sincerely doubt it. The only reason Lyoness organises treasure hunts with incredible prizes, is to try to create some goodwill and to lure some more people into the scam. Goodwill is also one of the reasons that Lyoness is 'investing' in a 'sustainable and fair world' through its charity foundations. It has been suggested that another reason for that is to obstruct justice and to be able to easily move illegally made money from country to country.
In other words, you (as a Lyoness victim) paid for Freidl meeting Nelson Mandela. You also paid for his 'birthday trip' to the Maldives. I can imagine that the victims of Lyoness are pretty frustrated that Freidl is such a big spender - with the money he took from you. Everything Lyoness has paid, you paid. And odds are, you will not see this money back. I wonder whether Freidl got cash back with every purchase.